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tv   Your Money  CNN  October 16, 2011 12:00pm-1:00pm PDT

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causes including health, economics and the environment. the former president turned 65 this year. >> i'll be back in one hour with an extensive coverage of the presidential race at 4:00 eastern hour. the entire hour devoted to the race for the white house. polls showing a new frontrunner among the republicans. it's a name that has been on top before. and one of herman cain's fellow candidates says cain has a real shot. this comes from someone who wants the nomination as well. details in an hour. stay with us. i'm fredricka whitfield. "your money" starts right now. while america may be on the verge of recession, are political leaders paying more attention to creating jobs or saving their jobs? i'm ali velshi. welcome to "your money." the economies in the united states and europe are teetering on the edge. a time when bipartisanship and cooperation are desperately needed in washington but instead both sides are accusing each other of playing politics.
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stephen moore, a good friend of the show, editorial writer with the "wall street journal." this week, as expected, president obama's jobs plan failed to pass the senate with an election in november 2012, just over a year away, are we looking at another major overhaul in congress and perhaps the white house? are we looking at a situation where voters might say throw all the bums out? >> yeah, we are. i've been looking at these numbers. you have, too. i've never seen incumbents in washington so unpopular, even more unpopular than in 1994 when we had a big election and threw the bums out. this is not a good time to be an incumbent, republican or democrat. some of the political pros i'm talking to are thinking maybe as 100 incumbents in the house could lose, which would be a near record. >> for conservatives like you, fiscal conservatives like you, what is the best strategic way to achieve your goals given everybody is mad at everybody right now. >> look, i do think it starts with the president.
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i don't think this plan that he put forward is a serious jobs plan. to increase tax rates would actually hurt the economy. republicans were never going to go for a big new spending plan. i don't think the president put this out there as something he thought would pass but rather as a political document. i do think there's still a chance, ali that there might be a smaller package that passes some time in the next six months or few weeks that might be the payroll tax cut which is part of what the president wants and maybe some other infrastructure spending but much scaled back. i don't know if it's going to do enough to stop this real slide in the economy that continues to seem to get worse. >> you're optimistic in the next six weeks they are also going to have to deal with the super committee. >> let me say one quick thing. at least we did have a bipartisan triumph this week. that was these trade deals passed. i'm a big fan of those. i think they will create jobs. those were three trade deals with countries like korea and panama.
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we had a president for it and republicans and congress for it. sometimes bipartisanship happens. >> all right. stay right there. chrystia freeland editor of thompson reuters digital. speaker of the house john boehner says he's disappointed in president obama. listen. >> i can't tell you how dangerous our situation our economy is in, how dangerous the situation in europe is. yet the president some 14 months before the election throws in the towel and decides he's going to spend all this time out campaigning. >> if you recall, chrystia, during the debt ceiling debate, the president was saying the same thing of congress. i'm here, why don't you come back and deal with this problem. what do you make of this? >> there is a certain pot calling the kettle black here, right? isn't there, ali? i'm disappointed in everyone in washington now. i do think boehner is right on one thing, now is a moment when
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america needs very decisive leadership. the world needs it. i think sometimes when we look at what's happening, fragility of the u.s. economy, what's happening in europe, it's easy to throw up your hands and say disaster is inevitable. but actually it's not. good policy right now could save the world. i share the disappointment but i think boehner is equally to blame. >> you make a very good point our next guest has written about david gergen, senior political analyst. david, i'm paraphrasing your words but you have actually said that this isn't like a hurricane, this is a public policy matter. these are things that can be undone. trust in government -- chrystia is mad at everybody. trusting government. to do the right thing has hit an all-time lowp. take a look at these numbers. when are the politicians in washington realize the same old way of doing business is not what americans want, they want a change of course specifically to the point you've written about, david. the power is in the hands of americans to change course. >> it certainly is, ali.
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if you go to a variety of communities in this country you see things happening that are encouraging. i was just in new orleans a few days ago, and that city has turned itself around since katrina, had a near death experience, politics are better, business community investing, and the schools, there's a huge turn around going on in the schools. that can happen in some communities. the mystery is why it's not happening in washington. so far there's just been a lack of will and i do think that you have to keep throwing the bums out to get the message done. i don't see any other way the public can succeed in bringing better government to washington. >> how do you do that, david, effectively. what happened in 2008 people frustrated by what they felt was very big government, attracted to a fiscally conservative campaign run by, in many cases, tea partiers, but other fiscal conservatives elected a congress that got as little done as the congress before that. so literally do you just keep throwing the bums out until you
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get a group that gets something done? >> i don't see that the public has much -- there are many other opportunities or options available to the public. some givers could do what the ceo of starbucks has done, that is to declare a boycott on giving any more money to politicians, he's got over 100 ceos to agree on that. that can also make a difference. politicians pay attention to that. the critical thing, ali, right now, is the campaign for 2012 has started way too early. both sides have done this. republicans were out there first. there was a time, as you recall, mitch mcconnell said, our most important objective over the next two years is to bring down this president. that was a campaign statement early, early, early after the 2010 elections. now the president has gone on the road almost full time. he's no longer governing. what he needs to do is actually restart negotiations both on jobs, because the republicans have shown, as steven just said, on some issues on trade they
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were the ones that put the votes out there. over 80% of votes against trade agreements the president pushing for job purposes, 80% against in the house came from democrats. the republicans won that. republicans are prepared to sit down with the president on some issues and try to negotiate this out. ali, we've lost sight of this deficit group. where are they? >> that's a good discussion we're about to discuss, actually. hold on. there may be another road. it may involve this anger that we're seeing. the economy has got people angry. it's got people scared. both parties go out there and say they feel your pain but which is a side that can turn that anger into votes in november in that might be our third road. we'll take a look next on "your money." all of you stay there.
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the occupy wall street movement has the attention of half the country. an orc/international caravan
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poll found the country almost directly split on whether they had heard of the protest or not. what about if you agree with the movement. 27% said yes. 19% said no. 54% were not sure. not surprising since the goals of the occupy wall street movement remain relatively unclear and unfocused. so david, i want to ask you, tea party anger eventually translated into an organized movement capable of getting many candidates elected and directing much of the conversation that we're talking about right now. is either party, but one would assume particularly the democrats, looking at this occupy wall street movement as something they can harness and turn into votes? >> sure. the president has made it clear he's very sympathetic with many of the sentiments he's hearing out of there, even the goals themselves are not clear, this could be a tea party of the left, a progressive tea party, if you would like. it does bear some similarities to what we saw from the tea party springing up from the grassroots.
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so far it's inchoate. it hasn't come together in such a way you can say here are the top three things they believe in. we have to wait and see. it could grow. let's have some cold weather here and see how many people are willing to stick it out. we'll have a much better sense -- >> they've pushed back on the idea that they should have a list of three things they stand for. stephen you've written this could bite the democrats? >> it could. look, i was out there in new york about a week ago and i was at the protest at freedom park in washington this week. a lot of the messages just don't -- aren't going to be comfortable to kind of mainstream middle class, independent voters. >> which messages do you think? >> for example, this chant of "down with free enterprise." who believes free enterprise is the problem with america? i do think there's a problem that it becomes so radical, and the message is so off target, it
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could actually turn off voters watching this on tv and say, wait a minute, who are these people. >> chrystia, what's your analysis of this? you've been watching it unfold. >> well, i do agree with david, that i think this has a lot in common with the tea party. i think that both movements, which are i think are both very important, are tapping into extremely justified populist anger with where the economy is. i disagree with stephen. i don't think occupy wall street is at its heart particularly radical. i think it is a sort of a progressive version of the tea party. what i think is missing there is a clear notion. i think there's a shared anger, a view this economy isn't working. the strength of the tea party was they immediately had a view on how to you fix it, make government smaller, get government out of the way. the occupy wall street guys have almost exactly the same complaints and there is a similar sort of anti-elitist
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vibe in both movements. but the occupy wall street group doesn't really know what the magic bullet is. i do think that makes it harder for democrats to harness and harder for the movement to have such a direct political impact. >> chrystia, also the message is kind of contradictory. on the one hand they say down with wall street, down with businesses, down with profit, down with corporations, then they say we want jobs. where do they think jobs come from? >> these movements are always internally contradictory. you can say the same thing to the tea party, get your government off my medicare. you know, i think both movements are very real. we should not ignore them, have a hoity toity view of this is populist, so they don't have an absolutely clear philosophy, because they are right. the truth is the u.s. economy is not working for the american middle class. >> that's for sure. >> we should listen to people saying that. i think it's the job of the politicians,
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actually, to formulate a clear policy. >> david. >> i just wanted to add, i do think it has potential. it hasn't yet come together. but the unemployment rate among young people in this country is so high, so much higher than the rest of the country, that if the young people were to come together and have a demand for jobs, without a particular agenda to go behind it, it could be like the anti-war movement that didn't have a timetable for getting out of vietnam but knew what it wanted. that was to end the war. if young people were to come together, they could become a potent force and could turn out in large numbers as they did in 2008 for barack obama and made a big difference in the election. that's where i think the potential is. it's amazing to me that the political class is not paying more attention to the young and not doing more to create jobs for the young. this is an idealistic generation that could get turned off and soured on america if we don't respond. >> although the good news, david, there are young people involved in this protest who you
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will often hear are disengaged and not involved in the political process. however you like how they are doing it, they are getting involved. there is a distinction drawn here, stephen. they are calling themselves the 99% as opposed to the 1% that control the wealth in this country. it is really drawing class lines. that could be cause for alarm. >> what's dangerous about the movement -- by the way, this started with warren buffett and president obama saying the rich aren't paying their fair share. we have to raise taxes on the rich. look, i'm not here to defend rich people, but i think it is important to understand that those people in the top 1%, 5%, 10% are the preponderance of the employers in the country, sign the front end of the paycheck not back end of the paycheck. the idea we can somehow steal from the rich and we're going to
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make the economy better off. that ain't going to work and it's never worked before. as john f. kennedy and ronald reagan said we need a rising tide that helps all boats. steven moore with "the wall street journal," david gergen senior political david gergen, senior political analyst at cnn and chrystia freeland, editor at thomson reuters digital. the short-term financial future of the united states could be decided in the next month by 12 politicians in washington. i'll explain when we come back.. meineke's personal pricing on brakes.
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i tell you what i can spend. i do my best to make it work. i'm back on the road safely. and i saved you money on brakes. that's personal pricing. the clock is ticking for the super committee, the goal for six democrats and six republicans on the hill reduce our nation's deficit by at least $1.2 trillion over the next 10 years. this is a resident scholar at the american enterprise institute. norm, good to see you here. the committee's plan due in november, about thanksgiving, then to about christmas to vote on it. no change on whatever this committee decides. you wrote the super committee may have the fate of the world
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in its hands. you wrote they have an unprecedented chance to do something remarkable. norm, what are you talking about? >> well, let's hope they don't produce a turkey by thanksgiving, ali. the fact is we've got very few weapons at our disposal to try and jump-start not just our economy but the global economy. we have almost no opportunities left to do the kind of grand bargain every bipartisan group, simpson bowles, the gang of six came up with. $4 trillion deal over ten years, tax reform, revenues, deal with major health entitlements and the rest of spending. this is our last chance. i believe if the super committee is able to do that, it would create a psychological shock wave that could actually have an extraordinarily positive impact on that portion of the economic trouble that is psychological,
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call it 20 or 30% because nobody expect it to happen. if they don't do it, they will i'm skeptical get the $1.2 trillion, which will be harder and we're back to everybody believes we can't solve the problems. nobody will spend. business won't invest. >> you're saying the surprise will be nice. we all kind of believe nothing will happen. hold on, norm. co-chairman of the super committee democratic senator patty murray seems to understand what you're talking about. >> the public is watching us very closely to see if we can show this country that this democracy can work. i carry that weight on my shoulders and so did every member of the committee. >> let's bring in a senior writer at cnn money. jean, it may be more serious than norm is put it. maybe we're not going to get $4 trillen in cuts over ten years but if we don't get the $1.2 trillion, let's not forget this triggers a series of across the board cuts that could be substantially more dangerous. >> well it's -- they're across-the-board
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cuts that nobody is supposed it have, defense domestic discretionary that's something for republicans and democrats to hate. people say congress may, in fact, modify or repeal the trigger because it may -- >> it's too dangerous. >> it's too dangerous. right. it's too dangerous and it's too politically unpopular. but the problem is, you know, it's not just the public that's looking at, you know, this committee to see if they can show the congress can work it's the credit rating agencies as well. the summer after the ceiling debate, they gave us fair warning, look, if this process fails, this is going to negatively affect your rating. as we know, s&p already downgraded us, moody's put us on a negative outlook. >> isn't that threat empty given that after being downgraded the first time, the cost of borrowing in the united states went lower, cost of united states borrowing money is still lower, when you look around the rest of the world it's still a safer bet than europe. >> that's right. and that may continue for a while. one thing you don't want is add
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more instability to the market. one of the things the downgrade this summer may have done is contribute to the volatility in the market, which nobody likes. so it's one more thing that we don't actually need. it may not stop the world if they do downgrade us but it's a negative factor. >> norm, in roll call in september you wrote the failure to act in the strong bold way you're talking about right now could actually risk a depression. we've already got some people thinking we're in a double dip or heading for a second part, you think the failure to act could be substantially more serious than the status quo. >> i'm really worried about europe. i think it goes well beyond greece. my colleague desmond lachman has been spot on in his predictions. is pessimistic. you know, there's so many signs that are parallels to what we saw in the early 1930s that it's kind of chilling. i'm looking at the super
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committee as obi-wan kenobi. our only hope. >> let's hope they take it serious. i think they do. hope they do. whether the budget fight this year or the debt ceiling didn't do anything until we were up against the deadline, the 11th hour, in some cases well beyond the 11th hour. otherwise keep thanksgiving free. we'll be here talking about it. gene and norm. herman cain says his 9-9-9 plan can simplify the tax code and produce enough revenue. is it true in tom foreman on the fact checking case next on "your money."
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herman cain says he can simplify the tax code. mitt romney says we have to cut government spending. how much of what the two candidates are saying is actually true. cnn's tom foreman with a fact check. >> ali, every politician in washington is talking about the economy these days and jobs and what they can do about it. one of the plans getting the most attention right now is
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herman cain's 9-9-9 plan, which he says will replace all the revenue we're currently taking in with a massive revamping of the tax code. listen -- >> it will replace the corporate income tax, personal income tax, capital gains tax, death tax, and most importantly the payroll tax. >> but is that true, his idea the 9-9-9 plan will do all this. well there are some very clear skeptics out there right now among economic analysts. people who look at this and say this idea of 9% corporate tax, 9% personal income tax and 9% sales tax, may not add up to what we think it will. in part because it's unclear what exactly will be covered by sales tax, what exemptions there might be depending on your spending. spending habits may change if we put an additional 9% tax on everything we buy. how much do we know how much we're spending then, how much revenue will we get. corporate tax calculations can seem like something fuzzy under this plan. so we have to give it a ranking
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of true but incomplete with an emphasis on incomplete because it seems like no one in washington has yet been able to totally pin down what this plan would mean. moving on mitt romney had interesting things to say about this, particularly the idea as the committee tries to balance the budget and figure out what we should do about reducing our deficit they should be looking at the idea of less government spending. listen. >> the american people want to see growth and jobs and believe the right way to do it is by cutting back on the scale of government and they are right. >> is this true that americans, in fact, want less government spending? yeah, 57% of one of our recent polls say we need major cuts to domestic spending. what mr. romney did not mention is 63% said we also need higher taxes on wealthier americans and businesses. by leaving that out, he also falls into the category of true but incomplete. i'm sure we'll hear a lot more from every camp as the campaign goes on. ali? >> all right.
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thanks, tom. in addition to criticisms of his economic plan, mitt romney has had trouble gaining support among the tea party. cnn contributors dana and cain are here. dana is a contributor with the tea party. dana, looking at some of your tweets here, just to get a flavor of where you come from when it comes to mitt romney. i was against him last election, this election, i will be songs against him so long as he is a unprepented rhino, republican in name only. they go on. that's sort of the flavor. you're not supporting mitt romney. what's your problem with mitt romney, who is polling most days higher than everybody else in the republican race? >> well, he and herman cain are neck and neck in a lot of polls, cain came out on top in the recent poll in south carolina. the last primary i was weighing which was worse romney care or mccain-feingold. i ferged mccain fooil fine gold was the worse. mccain is not a factor this primary.
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but romney his record is what i have a problem with. he's not a conservative. he's not a conservative candidate. i really do appreciate the people who try to insist he is. look at his record governor of massachusetts, 47th out of 50 states with job creation. it's still a socialist health care plan at the state level. socialism at any level is socialism. he tries to use federalism. as a way to excuse it. >> let's stick up for him a little bit, bring in herman cain's nephew, will cain, that's my uncle and job, i didn't know that. >> will cain is not his nephew but he is a cnn contributor. herman cain is giving mitt romney a run for his money but mitt romney is still most republicans' choice for the most part. >> dana is not alone in her feelings about mitt romney, there's a complete lack of enthusiasm. you can see it in the polls. while rick perry and michele bachmann have rise and falls, 7% to 20% and back to 7%,
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virtually none of that support flows over to mitt romney. but there's a sense of resignation with mitt romney. support is resigned to go to mitt romney at some point. the reason for that is because a complete failure, a complete lack of viable alternatives. a failure to find alternatives to mitt romney. rick perry, stinks of corny capitalism. he stinks of pay-to-play. michele bachmann shows a complete ignorance of concepts like -- conservative concepts like federalism, declaring myth romney's health care mandate unconstitutional or free market saying she can give $2 gasoline. i think what you see with mitt romney, there's a sense of inevitability, it will end p being him. >> dana, what do you think of herman cain's ascendence lately. >> i like herman cain. my only criticism of herman cain has been his lack of foreign policy experience and i've been pretty outright with that from the beginning. he needs to be tested a little bit on that and if he is the nominee he should pick someone with a strong foreign policy record. i look herman cain. he's got at retail politics, on
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the economy. i have concern about 9-9-9 plan, because of the national sales tax and possible foundation for a value added tax like we see in europe. other than that, he's better than in my opinion what we have in the white house right now. so i don't think that -- he seems like a good candidate but we still have a long way to go and there's still a lot of vetting to be done. >> i feel the same way about herman cain. he's an attractive candidate. his biography alone is compelling. 9-9-9 i agree has some serious substantive problems. for conservatives like dana who strongly oppose mitt romney, i say this with all due respect, you have to ask yourself are you taking a position similar to that of occupy wall street. i'm going to complain about mitt romney but what will i do in ? will you vote for obama if mitt romney is the candidate? what will you do? >> good question. >> i'm so glad will brought that up. i have respect for will, by the way. i think that winning congress, winning the house of representatives and winning the senate, is so under appreciated.
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because this is -- >> i agree. >> i sort of look at it like this. if we have another president -- another term of obama. if we have -- if conservatives take over the senate and maintain control of the house, that's going to pretty much circumvent anything radical he would try to do. if you have someone like mitt romney who gets elected and you have a strong conservative presence in the senate and house of representatives, they are going to do kind of the same thing and circumvent anything mitt romney will do. the problem is, is the republican party selling out its soul. there comes the time when you have to ask yourself, when is compromising over and over again too much to the point where the party becomes indistinguishable from the other party. >> that's a philosophical question, but ask yourself would you rather have a republican congress with obama as president or republican congress with romney as president. i think the second alternative certainly sounds better. >> i would think that any generic republican candidate to echo some of the polling, when they don't even bother naming the republican candidate, beating
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obama in the polls. i think any republican candidate would do at this point. i think i'm not ready to say mitt romney is going to be the nominee. i'm still -- rick perry may do something, herman cain may -- >> why because we're 13 months away from election, you're wise. everyone else is treating this thing like it's going to be decided in the next month. >> everyone is ready to crown mitt romney. i don't understand the rush to immediately look at him as the nominee for the republican party. we're still so far away from that. in terms of fund-raising, sure, rick perry has problems. none of the -- i haven't decided on a candidate and i have criticisms of every single one of them. but he outfund raised mitt romney. he raises $3 to $4 million. than romney did last quarter. >> he did some stuff on friday to put some new energy into his campaign putting out an energy policy. let's see where we go with that. we have lots to go to talk about that. dana, thanks for being with us. you should follow dana on her twitter. interesting stuff. >> what about me? >> what's your -- >> will cain pretty simple. >> dana? >> d-lash.
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>> follow these two. good stuff. >> loesch. very good. make sure to tune in october 18th, tuesday 8:00 p.m. eastern for cnn western republican presidential debate, las vegas, anderson cooper will moderate. now i've got a question for you. if a foreign student gets a degree in the united states in science or technology or engineering or math, should they be allowed to stay here and use that education to start a business? would that actually create jobs here in the united states? don't answer. don't answer. think about it for a second. we're going to take a break, pay the bills and talk about it on the other side. committed to improving lives with honest, personal service, 5-year price lock guarantees and consistently fast speeds. ♪
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y you stayed which means you're interested in my question. welcome back to "your money." the president's council on jobs and competitive addressed immigration reform. and it concluded, quote, highly skilled immigrants create jobs, they don't take jobs. in a competitive, interdependent 21st century economy we must attract these entrepreneurs to the united states. that's a long report, that's just a portion of it. with me now, christine romans, host of "your bottom line," richard quest, ron harrah, associate professor of
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public policy at the rochester institute of technology, co-author of the book "outsourcing america." let's start with you, christine. the very company's advising the president how to create jobs here in the united states are venturing into immigration reform. what do companies want? >> they want to be able, according to this particular report, venturing into the sticky area of immigration, thin layer, highly skilled foreign workers. they want more visas to bring people in from other countries to do highly skilled jobs in this country. they want automotive work permits from any foreign student who graduates from an american university with a degree of science, technology, engineering and math. all of this is something that's been discussed many, many times. we have lots of programs in place, including one anybody wants to invest, entrepreneur wants to invest $500,000 to a million dollars can come to the country to do that. a lot of work permits and the like. this comes at a time with 14 million unemployed in the country and 27% underemployment
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or something. it will be a politically charged debate, no question. >> bill gates thinks there's a shortage in american stem workers, science, technology, engineering, matt mattic workers. this is what he said before the house committee on science and technology. this in spring of 2008 before the recession but may hold true. although our top universities continue to rank among the world's best, too few american students are pursuing degrees in science and technology. ron, you do not agree. you do not think there's a shortage of science, technology, engineering talent in this country. why not? >> well, we have a lot of evidence to show that we actually have too many science and engineering workers chasing too few jobs. in fact, the unemployment rates for computer occupations, computer professionals and engineers are two to three times the rate we would expect at a normal full employment level for them. in 2010 we had an average of 300,000 engineers and computer professionals who were
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unemployed seeking jobs. just to point out microsoft has been in the process of laying off 5,000 workers. over the last 18 months. it's hard to believe they have a shortage when they laid off 5,000 workers. cisco announced layoffs of 6500 workers, ibm downsized its american workforce by 35,000 over the last few years hewlett-packard, 35,000. >> so we have to separate, we have to separate things though, ron. we've been in a recession the last few years. that may be separate. everybody in the country laying people off. richard, bring this in from a larger perspective, global perspective attracting talent assuming you're in a recession. -- assuming you're not in a recession. companies have to plan for days when times are good and competing for worker around the world. what's your take on this? >> that is exactly the point. lord help me i'm agreeing with ali velshi. the truth of the matter, you don't make public policy for
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just one year or two years. for instance, if you look at the highly qualified visas, the cap that has been on there for some years, year after year after year industry in the u.s. has butted against that cap and demanded more highly qualified visas. this year they are not going to. they haven't even reached the cap yet. they are okay this year. the stem visas for education, that's a really interesting one. the fear here is that with every diploma you give you hand out an h1b or green card visa, and if that happens, although the prestigious universities will be doing it in an honest bona fide way, this could be a back doorway to wholesale i won't say fraud but wholesale blurring of the rules in the united states. >> ron, you brought that point up. if you're going to do something like this, whether you agree or not, there has to be safety checks in place, so you don't
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all of a sudden giving birth to schools that exist to give people visas. >> absolutely. >> that's a very important point. i think another important point is to separate h 1 b guest worker, temporary nonimmigrant visa, versus a green card. i favor increasing green cards, but i don't think at least the proposals that have been on the table stapling green card to every advanced degree in stem is a good way. i think we should bring highly talented professionals in things like broadcast journalism as well and offer them green cards. i think we have to be careful about disentangling temporary guest worker visas versus green card. very different animals. the h1b is a program that has benefited the outsourcing firms, the major offshorers, are the biggest users of the h1b program and literally it's led to the demise of tens if not hundreds of thousands of american jobs. >> richard, why are you getting
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uncomfortable about that. >> the theory is perfect but practice is anything but. anybody looking outside the united states looking to get the h1b, looking for that diploma, looking to go to the united states, frankly, has an eye on a green card. that's what they want ultimately. they are not doing it short-term with a view to a year or two. >> leave it there. lots to talk about. an important issue we'll talk about many times. ron here ra, assistant public professor and co-author of "outsourcing america." christine and richard stick around. more to talk about. more and more banks hiking fees for things like using your debit cards for purchases. before you get angry step back. do they have a right to charge you for that service? we'll talk about it next on "your money." [ indistinct talking on radio ]
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welcome back to "your money." richard and christine still with us. let's talk about high-frequency trading, sounds like a video game but it's not. it's a critical tool used by bigger financial firms to trade stocks and options. sometimes they hold on to them for just seconds at a time. jus. more than half of all stock trading in the united states is made this way. and it could be partially responsible for huge market swings. now, it is raising the eyebrows of regulators. richard, high frequency trading, should something be done to rein in this type of trading or are we looking for a scapegoat in this down economy? >> the fact is, you can't put the jeangene genie back in the . all you can do is come up with a serieses of rules to make the genie behave better. if you listen to the marketmakers, they say it is a great thing, it gives liquidity, allows the market to function,
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it exposes weaknesses but it is a nuisance and it has a lot of mischievous sides to it. what needs to happen to it, it needs to be properly regulated. >> you heard about the massive trading operations that move their server farms close to exchanges or other people server farms to save a fraction of a second and being able to get a price advantage and a trade. we can't compete with that. regular people can't compete with that. >> you even said they hold on to trades for mere seconds. mere seconds, that's a buy and hold strategy for some of the programs. i'm not kidding. they're selling things like this and buying them back and doing really complicated multd cross platform trades where, i mean, if you're looking at it with a human eye, you may not understand what the computer is trying to tell you. people are going back and trying to analyze what kind of choices do the computers make. >> it takes this whole concept of buying something for value out of the equation. >> it is meant to find and to exploit inconsistencies or
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strange spreads in the market and make money off of that very, very quickly. and one thing about high frequency trading is i feel like it can trigger reactions from other computer programs that can really exacerbate the volatility in the market. >> things may not be as volatile as they may seem. >> look at these markets, right, and try to rationalize them. when they call us on tv and sigh why is the dow down 500 points today, and we give what seemses like a valid answer, it could be because a bunch of computers decided they were selling stocks. there was a strong reaction when banks like bank of america announced they with start changing customers a monthly fee for customers using their debit card for purchases. why do they not have a right to charge a fee for service, and why do i not have the right or obligation to say i'll go somewhere else to keep my money. >> you can go some place else. it is tone deaf they're doing this because they have every right to do it because their responsibility is to their
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shareholders. before you start tweeting me that i'm an evil lover of capitalism, they're not for profit credit unions there are banks paying you to use their money, you know, or to deposit your money. and i don't think the dirty little secret is i think the banks know that people don't walk. they don't walk enough in enough numbers for the banks. >> we complain about gas in the united states and talk to you guys, i have no idea what it is like for you. >> first of all, on christine's point, she's so spot on. you're more likely to get divorced than to change your bank. the statistic has been around for decades. the decades that number. i've been with the same bank for 30 odd years and i can't -- sometimes i looth it, sometimes i want to -- but to answer your point, in the uk, you don't get charged for u ed for using your card as a purchase. they have agreed, having used to charge each other for cash withdrawals, now everybody gives free cash withdrawals within the
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banking system. absolutely. basically all that has to happen, truth is, all that has to happen is one has to break ranks and everybody else follows. getting your -- paying to get your own money or spend your own money -- >> must be a serious problem. >> -- is offensive. >> you agreed with us on a few things today. richard quest, host of "quest means business." when you're traveling outside of the united states, catch that on cnn daily. and christine romens, co-anchor on "american morning" and "your bottom line" on saturdays. the passing of steve jobs had many wondering where innovation in america has gone. i found it and i'll tell you exactly where it is happening next. the markets never stop moving. of course, neither do i. solution: td ameritrade mobile. i can enter trades. on the run. even futures and forex. complex options? done.
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time now for the xyz of it. you hear about the demise of american innovation. in some quarters, it is alive and well. just ask the gang at elastic
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american marine. earlier this week, they won a million dollars, first prize, in the latest challenge from the x prize foundation, an organization i talked about before that motivates innovators through competition to solve real world problems. the challenge they won was funded by wendy schmidt, the wife of google ceo eric schmidt. she spent the meer frustrated watching the slow cleanup of the oil after the bp spill in the gulf of mexico. for almost three months, that oil spilled into the gulf, 4.9 million barrels of it. so wendy thought there had to be a better way. she teamed up with the x prize foundation and together they challenged the world's innovators to find it. 350 teams entered, ten made it to the finals and two met the criteria set by the challenge. the winner, elastic american marine developed technology that skims 4600 gallons of oil a minute from the ocean's surface. the previous best tested rate was 1100 gallons a minute. thanks to the x prize, it is now
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possible to clean up an oil spill nearly four times faster than technology used during the bp disaster. as you can probably tell, i'm a big fan of the x prize. what is not to like about using old-fashioned competition to spur innovation and make the world a better place. and the prize money itself is just the seed. these challenges end up generating a lot more. seven years ago, the x prize foundation helped give birth to the commercial space race by awarding $10 million for the launch of a private spacecraft. since then, more than $1.5 billion in public and private money is poured into the private space flight industry. it just goes to show, a little competition can go a long way. the challenges are global, but often the winners are american. that goes to show that with the right kind of care and watering, american ingenuity isn't going anywhere. thanks for joining the conversation this week on "your money." we're here every saturday and sunday. check out my new book with christine

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